Don’t get bit by Bitcoin, U.S. agency warns

A consumer advisory warning issued by a federal agency Monday highlights the risks of virtual currencies such as Bitcoin.

The Consumer Financial Protection Bureau said it is accepting complaints about virtual currencies here.

“Virtual currencies may have potential benefits, but consumers need to be cautious and they need to be asking the right questions,” said CFPB director Richard Cordray in a statement. “Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the market.”

Such offerings as Bitcoin, XRP, and Dogecoin bill themselves as a way for people to track, store, and send payments over the Internet. But they are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund if a virtual currency company fails – and many have, agency officials said.

Other concerns: volatile exchange rates, security threats from hackers and scammers and limited opportunities to offer help or refunds for lost or stolen funds.

Last month a group representing virtual currency concerns, the UK Digital Currency Association, said such currencies represent a “global trend” and argued proposed regulations could stifle development “detrimental to the public good.”